The Arbitration Act 1979 (c.42) was an Act of the Parliament of the United Kingdom that reformed arbitration law in England and Wales. Prior to 1979, arbitration law was based on the Arbitration Act 1950, which allowed use of the "Case Stated" procedure and other methods of judicial intervention, which marked English arbitration law as significantly different from that of other jurisdictions. The prior law significantly increased the cost and time required for arbitration, which made England an unpopular jurisdiction to conduct such negotiations in. As a result, while London maintained its traditional position as a centre for arbitration in insurance, admiralty and commodities trading, it failed to attract more modern forms of trade. Following pressure from industry groups, the Lord Chancellor introduced the Arbitration Bill into Parliament, having it passed hours before the dissolution of James Callaghan's government. It was given the Royal Assent on 4 April 1979, and commenced working on 1 August 1979.
The Act completely abolished the "Case Stated" procedure and other forms of judicial interference, replacing it with a limited system of appeal to the High Court of Justice and Court of Appeal of England and Wales; it also allowed for exclusion agreements limiting the rights of parties to arbitration to appeal to the courts, and gave arbitrators the ability to enforce interlocutory orders. Academics met the Act with a mixed response; while some praised it for bringing English law more into line with that of other nations, others criticised the wording used as unnecessarily complex and hazy. The Act did, in the eyes of some commentators, lead to a shift in judicial policy away from legal certainty and towards a system focused on speed and finality. Having been repealed in its entirety by Section 107(2) of the Arbitration Act 1996, the Act is no longer in force.
Background
Previous law
London was historically a centre for trade and arbitration, which Peter S. Smedresman, writing in the Journal of Maritime Law and Commerce divides into three categories of transaction. English commodities trading, through bodies such as the Baltic Exchange, specify that any conflicts are to be settled through arbitration in London, even when the goods being traded have no relation to the United Kingdom. London has also been a centre for arbitration on maritime issues, and insurance. However, it failed to significantly attract more modern forms of trade, such as major communications developments or high-technology projects, due to the nature of its arbitration law. These contracts normally involve large amounts of money and are administered by the International Chamber of Commerce, which rarely sent arbitration cases to London due to the individual nature of English law on the subject.
In most nations, arbitrators can apply the principle of "amiable composition"; the case is decided under broad, sweeping principles of equity, without judicial oversight or the application of national commercial law. In England, this was not the case; the Arbitration Act 1950, in Section 22(1), allowed the courts to instruct an arbitrator to "correct" his decision, if it had an incorrect statement of law immediately obvious. In response to this, English arbitrators simply stopped giving reasons for their decisions. The second form of judicial oversight was found in Section 21, and was an application of the "Case Stated" procedure. This allowed judicial review of a decision by the High Court of Justice, and was regularly applied during the 1970s, because the freeze on interest rates during a delayed case made it attractive for debtors to delay; conversely, this made London a far less attractive venue for creditors.